TIA Submits Comments with other industry groups to FTC regarding PIRG’s petition for a rulemaking on Right to Repair
Re: Docket number FTC–2023–0077; Request for comment on petition for rulemaking submitted by U.S. Public Interest Research Group Education Fund and iFixit.
Dear Mr. Christie:
The undersigned groups are writing to express our support for the petition for rulemaking submitted by U.S. Public Interest Research Group Education Fund (PIRG) and iFixit urging the Federal Trade Commission (FTC) to promulgate rules governing consumers’ right to repair products and devices.
The status quo is not working and will only get worse for consumers who need passenger car and truck services as vehicle computerization further escalates.
Consumers rely on the independent automotive maintenance and repair industry for timely and cost-effective services, and FTC clearly described in its 2021 “Nixing the Fix: An FTC Report to Congress on Repair Restrictions” how the Magnusson Moss Warranty Act (MMWA) has not fully met those needs:
“The debate around repair restrictions illustrates the limitations of MMWA’s anti-tying provision in repair markets. While the anti-tying provision gives consumers the right to make repairs on their own or through an independent repair shop without voiding a product’s warranty, repair restrictions have made it difficult for consumers to exercise this right. Although manufacturers have offered numerous explanations for their repair restrictions, the majority are not supported by the record.”
The report goes on to state:
“To address unlawful repair restrictions, the FTC will pursue appropriate law enforcement and regulatory options, as well as consumer education, consistent with our statutory authority.”
The report accurately describes the extensive breadth of problems vehicle owners face and recognizes that FTC can take certain steps without further statutory authority.
Our groups have put together a list of recommendations that underscore the need for a comprehensive Right to Repair regulation. Although we are discussing real world examples applicable to the motoring public and aftermarket automotive businesses, we believe the issues raised and most of the solutions suggested can apply across industries.
We also agree with PIRG that Section 5 of the Federal Trade Commission Act applies, and we encourage FTC to use it to consumers’ maximum advantage. Lastly, those of us who submitted comments to FTC’s 2019 call for comments related to Nixing the Fix: A Workshop on Repair Restrictions incorporate that information by reference here.
OEM Notification of Rights
One of the major roadblocks experienced by consumers is not knowing about or understanding their MMWA rights or how to enforce them when their warranty claim is denied. This creates a ping pong effect where motorists are caught between the independent shop and the OEM-authorized dealer attempting to determine the actual problem with their vehicle and who is responsible for repairing it. Consumers would benefit in this situation from additional, official guidance regarding their ability to hold an OEM/authorized dealer accountable to explain in writing the justification for denial of the warranty coverage. The importance to consumers of understanding their warranty rights is highlighted by the fact that automobiles are still the first or second-most expensive purchase the average American consumer makes, and most of those consumers rely on those vehicles to get to the jobs necessary to make ends meet.
An example of a common real problem faced by motorists is a claim by an OEM/authorized dealer that the destruction of an engine was caused by the use of a non-OEM oil filter. The evidence necessary to prove that claim can only come from an engine tear-down, i.e., a mere visual inspection that indicates the use of a non-OEM oil filter is not sufficient evidence to prove a non-OEM part caused damage. However, most car owners don’t know that it is the duty of the manufacturer to demonstrate the cause of the issue and thus the dealer or manufacturer often gets away with avoiding warranty responsibility simply by blaming the aftermarket part for the issue.
In order to promote compliance with MMWA by dealers and manufacturers, we urge FTC to:
- Require OEMs/authorized dealers to provide written notice of MMWA rights at the time of any vehicle warranty repair denial and a written explanation of the evidence justifying warranty coverage denial.
- Require OEMs/authorized dealers to provide written notice of any maintenance or repair claimed to be required as a result of prior vehicle maintenance with an aftermarket part and/or done by an aftermarket service provider. This must be done prior to performing the maintenance or repair.
- Update FTC educational materials to note that consumers have the right to modify their vehicle and that warranty repairs may not be denied simply by the presence of a nonoriginal or specialty part.
- Mandate that disclosure of MMWA rights be included with warranty information provided at the time of vehicle purchase.
- Update FTC’s online consumer complaint form by adding notice of MMWA rights and contract dispute resolution options, e.g., BBB Auto Line, for vehicle warranty denials.
- Provide a specific site where automotive consumers can report MMWA-related issues experienced with OEMs/authorized dealers rather than forcing them to navigate the general consumer complaint site. Such action would both guide consumers in their stressful time of transportation crisis and provide improved compliance efforts for FTC.
Manufacturers’ Marketing Practices
FTC’s Nixing the Fix report discusses several examples where manufacturers provide communications that appear to discourage the use of non-original equipment parts or services, either in a technical service bulletin or in language used in an owner’s manual. Despite FTC’s 2015 enforcement action against BMW for including an owner’s manual command to consumers to use only MINI dealers for oil changes, automakers continue to include similar commands in owners’ manuals. Should FTC pursue the requested rulemaking, the undersigned Associations can provide a comprehensive list of problematic owners’ manuals. OEM in-vehicle telematics also command owners to return to the dealer for service. Even technical bulletins include recommendations couched in terms that appear to threaten or outright deny warranty coverage if a non-OEM brand part is used.
In addition, manufacturers have been advocating for bills in state legislatures across the nation that would require repair shops to use OEM procedures when performing collision repairs. While we do not dispute that shops must use the proper procedures in order to perform repairs, these procedures also “promote” the use of OEM replacement parts, making it appear that they are required in order to correctly complete the repairs.
In order to ensure that consumers receive accurate information, we urge FTC to:
- Recognize and prohibit OEM commands to use dealer service and/or OEM brand parts.
- Establish guidelines for a MMWA anti-tying compliance notice to be included in any communications between OEMs and franchised dealers regarding recommendations for use of original equipment parts or services, including maintenance and repair directives.
- Require manufacturers to include a disclosure in all repair procedures not covered by a warranty or recall that service providers are not required to use OEM parts and that they should consider all parts sourcing options when authorizing repairs.
Sideways Tie-in Brand Product Sales
Automakers have been exploiting a semantic technicality to avoid the MMWA prohibition against tie-in sales of brand products by requiring OEM brand specification fluids such as antifreeze and transmission fluid to maintain warranty coverage. In this anti-consumer scenario, an OEM requires their brand fluid and/or the brand fluid’s specification which may have its own name as well (e.g., General Motors AC Delco Dexron™ transmission fluid), but restricts access to the brand specification as proprietary property. That means a competitor can only make a competing brand specification fluid if they pay to get that fluid approved by the OEM or they’ll be attacked for fraud and/or stealing intellectual property. All fluids of that approved brand specification type are then (1) far more costly to consumers due to the expensive OEM fees involved, and (2) only available as the OEM allows, both of which are against the public interest.
Moreover, no OEM has proven that its brand specification fluid is the only one with which a vehicle can function properly (15 U.S.C. §2302(c)(1)) because they can’t. In fact, transmission fluid performance claims can be met or exceeded via different additive packages than those used in an OEM’s proprietary blends, which means there is no science-based rationale for discriminating against non-OEM brand fluids achieving required performance claims with a different “recipe.” The national fleet is flush with millions of examples of vehicles successfully operating with non-OEM brand specification fluids that may actually be superior products.
If an OEM requiring a brand product to maintain warranty coverage is an unlawful tie-in sale, then so is an OEM requiring a brand product specification where the OEM retains exclusive control of the specification’s use. Therefore, if a manufacturer makes a brand fluid or other part specification requirement, then they must either make that specification available so non-OEM companies can provide competitive, compliant products or acknowledge the alternative acceptability of fluids meeting a “suitable for use” aftermarket standard, such as the one for transmission fluid that is codified in NIST Handbook 130.
We urge the FTC to:
- Recognize that an OEM requiring a brand product specification where the OEM retains exclusive control of the specification’s use is a form of prohibited tie-in sale of branded products under 15 U.S.C. §2302(c).
- Establish disclosure requirements for OEMs when any brand fluid/part specification is required to maintain warranty coverage such that non-OEM suppliers can ensure to consumers that their products are consistent with or superior to manufacturer specifications.
Enforcement Measures
Developing better enforcement tools for FTC is more critical than ever. Having a database focused on MMWA would help the FTC better track those types of consumer complaints from the rest. Further, it would be helpful to cross check automotive-related MMWA complaints with consumer complaints made to the National Highway Traffic Safety Administration (NHTSA).
The Hyundai/Kia Theta II engine defect case is a perfect example of how disconnects in the current federal complaint system allow defective vehicles and related OEM mistreatment of consumers to avoid enforcement for years. In the Theta II case, OEMs/authorized dealers made an official practice of denying warranty coverage for the engine defects to consumers who obtained oil changes at non-OEM/dealer locations by claiming a non-OEM oil filter caused every defect. Consumers reported this problem to NHTSA but apparently not to FTC, although several of the undersigned Associations alerted the Bureau of Consumer Protection to the problem as early as 2012. Meanwhile, NHTSA waited years for a sufficient number of fire related engine complaints before taking significant action.
The major repair costs experienced by consumers in the Theta II case could have been avoided with MMWA-specific questions and/or educational information within the complaint systems and an automatic cross-check on complaints between the FTC and NHTSA.
We urge the FTC to:
- Work with NHTSA to create a link between NHTSA’s consumer complaint/recall system and FTC’s consumer complaint system for consumers experiencing (a) warranty denial based on unlawful tie-in sales of brand products and/or services; and/or (b) repeated repair denials based on OEM/authorized dealer inability to diagnose or repair a substantial symptom such as stalling, shuddering, and knocking.
Telematics
The vast majority of new vehicles sold today have the capacity for wireless transmission of data through telematics. This data has the potential to provide extensive benefits to consumers including improved safety and more efficient repairs. Although the MOUs with automakers may have been a good start, automakers continue to impose control over access to this data, meaning that a vehicle may be owned by an individual, but that individual has no control over their vehicle data. Instead, the vehicle data is collected, used, and may be sold by the OEM with little to no notice to, or consultation with, the owner of the vehicle. Access to mechanical vehicle data is critical to ensuring that independent shops can provide repairs and maintenance for vehicles.
Therefore, if the current control of data by OEMs is left unchecked, they will be the gatekeepers for in-vehicle data, ultimately determining whether a competitive marketplace continues to exist to the point of rendering the MMWA irrelevant.
Should FTC conclude it does not have the authority to restore and preserve consumers rights and a fair marketplace with regard to vehicle telematics, then we urge FTC to support H.R. 906, The REPAIR Act, because this consumer nightmare will not end without federal intervention.
We also incorporate by reference the comments submitted by the Auto Care Association on this issue.
Thank you for giving us the opportunity to comment.
Sincerely,
Tire Industry Association, Preventative Automotive Maintenance Association, Service Station Dealers Association & Allied Trades, Independent Lubricant Manufacturers Association, Automotive Maintenance & Repair Association
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